Every new car owner needs to protect themselves from high out-of-pocket costs from an auto accident. MCU recommends talking to your personal financial officer about GAP insurance when you purchase your next vehicle.

What is GAP Insurance?

GAP stands for Guaranteed Asset Protection, but it really does take care of a gap in your insurance coverage. GAP insurance pays the difference between what you owe on a car and what it's worth if your vehicle is totaled in a covered loss, such as an accident or theft.

How Does GAP Work?

Let’s say you total your car while swerving to avoid a deer—no one is hurt, but your car rolled into a ditch. The cost to repair your car is higher than its actual cash value (ACV). Your insurance company decides to total your car and determines that your car’s ACV is $10,000.

Your original amount borrowed is $18,000, and at the time of the accident, you owe $15,000.

You owe	$15,000
Your insurance says your car’s ACV is	$10,000
Your primary insurance deductible is	$500
	---------
Your total out of pocket expense is	$5,500
GAP coverage will pay	$5,500
The amount you owe with GAP coverage to payoff your loan is*	$0

*Subject to certain exclusions and benefit limitations. Talk to a personal financial officer for details.